Santa Clara County in California has filed a new lawsuit against Meta, accusing the tech giant of profiting from the spread of misleading and fraudulent ads (Scam Ads) on its Facebook and Instagram platforms . According to the lawsuit, the company was allegedly aware of the extent of the problem, but continued to allow advertising mechanisms that facilitate online fraud , violating the state's false advertising laws.
Wide-ranging legal action and compensation claims
The lawsuit is not limited to the local jurisdiction of the county, but is filed on behalf of all California residents, seeking monetary damages, civil penalties, and a permanent injunction prohibiting Meta from continuing these practices. The case is particularly significant because it touches on the core of the company's business model, which is based on targeted advertising and data analysis user
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According to a Reuters, citing internal documents, Meta is said to have made around $7 billion a year from ads related to fraud, bolstering claims that the problem is not just an operational weakness, but potentially a structural element of its advertising system.
Categories for targeted exploitation of vulnerable users
At the heart of the lawsuit is the allegation that Meta used a combination of artificial intelligence and sophisticated targeting algorithms to serve fraudulent ads to users who are more vulnerable to fraud. Santa Clara authorities argue that the company did not limit itself to simply hosting such content, but actively participated in optimizing its display.
The complaint also alleges that Meta has developed internal mechanisms that make it difficult to reduce fraud by prioritizing increasing advertising revenue over protecting users. These allegations, if upheld in court, could have significant implications for the regulatory framework for major technology platforms.
Meta's response and defense of its policy
Meta categorically denies the allegations, saying it is making systematic efforts to combat online fraud. A company spokesperson said the accusations were based on “false reports” and did not reflect the true extent of the security measures in place.
See also: Major publishing houses sue Meta for copyright infringement
According to the company, in the last year alone, more than 159 million ads related to fraud have been removed, while new tools have been developed to detect and mitigate malicious content. Meta also highlights its cooperation with international law enforcement authorities, claiming that it actively addresses both internal and external threats.
Advertising on social platforms under increasing scrutiny
The case is part of a broader wave of legal and regulatory pressure on big tech companies, which rely heavily on targeted advertising for their revenue. Platforms like Facebook and Instagram have repeatedly come under fire for their lack of fraud and misleading content protections.
Critics argue that this model creates inherent incentives to tolerate fraudulent practices, as advertising is a key source of revenue. On the other hand, companies emphasize that the scale of the platforms makes it inevitable to detect and address a large volume of malicious ads.
Involvement of law firms and next steps
For its legal challenge, Santa Clara County has partnered with three specialized law firms, including Bernstein Litowitz Berger & Grossmann, Renne Public Law Group and Bishop Partnoy. While legal representation has been delegated to these firms, all strategic decisions remain under the control of the county.
The development of the case is expected to be closely monitored, as it could affect not only Meta but the entire online advertising, setting new limits on the responsibility of platforms for the content they display.
See also: Meta loses historic child safety trial
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A potential turning point for social media regulation
Regardless of the final outcome of the legal battle, the case highlights a growing trend: a shift by regulators toward more aggressive oversight of digital platforms. As concerns about online fraud and misleading advertising intensify, tech companies are being asked to prove that their systems are not operating at the expense of user safety.
The Santa Clara case may set a precedent for similar legal actions in the future, fueling the debate over whether social media platforms should be considered mere intermediaries or actively responsible for the advertising content they display.
